With changes in technology, people’s professional and personal circumstances have evolved. We no longer live in a world where performing the simplest tasks takes days. This evolution and development have taken the financial world by storm. Paperwork is being replaced by bookkeeping software, tedious calculations are done in seconds, and you don’t need to hire a team of professionals to conduct research and analysis.
It all seems like heaven for financial experts in the modern world. But is there more?
The latest technological developments and trends indicate there is more to come. Although only time will tell the pace of financial planning in the future, let’s discuss the expected future evolutions.
Technological Integration with AI
Artificial Intelligence, or AI is slowly taking over different business aspects. An increased use of AI in financial tools can help complete tasks with maximum accuracy and efficiency, resulting in better decision-making and personalization. Whether looking for real-time data analysis, customized financial advice, or better investment strategies, AI integration in financial tools will transform traditional processes and provide innovative solutions.
We can expect AI to contribute in the following financial sectors:
- Risk Assessment: Analyze the financial market to assess and predict risks as well as potential frauds.
- Fraud Detection: Use AI to detect unusual behaviors in financial transactions and business activities and suggest solutions against fraudulent activities.
- Quantitative Analysis: Analyze historical, real-time data to optimize business strategies and suggest optimized strategies for the future.
- Investment Management: Offer investment advice to meet financial goals, risk assessment, and financial position to meet business goals.
- Personalized Financial Planning: Take information regarding your company to offer financial advice with maximum accuracy.
Since the use of AI is normalizing with time, the future of financial planning might have more AI dependency and less human roles.
Increased Virtual Privacy and Security
The financial data of any company plays a pivotal role in decision-making and understanding business performance. Businesses ensure their financial information is secure and does not have the potential to land in the hands of competitors and irrelevant parties.
Thanks to the heightened focus on data privacy and cybersecurity, it is now easier to safeguard sensitive financial information.
- Blockchain Technology: Cybersecurity uses blockchain technology to record financial transactions with maximum transparency, reducing data tampering risk. Financial planners will be bound to act in the best interest of their clients.
- ZTA: A zero-trust architecture (ZTA) where no one from inside or outside the organization is trusted by default and cybersecurity practices are implemented for verification on each step.
- Advanced Encryption: Encryption has already become a main part of any software/applications, but we expect advanced encryption to protect financial data.
- Cloud Computing: Elevated cloud security with robust features and regular updates. Homomorphic encryption is also becoming popular, where computations can be performed on encrypted data without decryption.
Businesses are now educating their employees and relevant stakeholders to train employees and stay ahead of potential threats that may arise. In the future, financial planners will implement different strategies to ensure that financial data is secure against rising cybersecurity threats.
Investment Into ESG
The combination of business and the protection of the environment has always sounded like a challenging task. Harvard Business Review published a study claiming that many businesses now incorporate ESG factors to increase sustainability and environmental well-being.
Financial businesses focus on incorporating Environmental, Social, and Governance factors to build company reputation and impress their clients by showing concern towards a sustainable future.
Let’s elaborate on ESG factors further to understand their impact on the finance industry:
- Environmental factors (E) involve substances in a business that might hurt the industry’s surroundings. For example, offices using accounting software to run transactions and store data should avoid using paper to play their part in tree preservation. Moreover, changes like using eco-friendly appliances such as air conditioners and computers will take over the traditional means of temperature control. Let’s consider this a stride towards the much-expected net-zero future.
- Social factors (S): Social factors mean the influence of a financial planning company on society as a whole. A financial firm must ensure that it complies with all the labor practices, maintains employee well-being, creates positive relations with stakeholders, and finds new and innovative ways to practice corporate social responsibility.
- Governance factors (G): The governance factors in ESG mean that financial planning experts should focus on transparency and honesty. Businesses will implement technological practices that reduce the risk of threats and fraud, increasing the welfare of their stakeholders.
ESG is already becoming a part of businesses that choose to invest in sustainability. However, a choice in the present might be a compulsion in the near future.
Diverse Client Demographics
Gen Z and Gen Alpha, with time, will have increased financial requirements because of which businesses will be required to adopt more modern policies and strategies to tackle their customers & clients. In short, financial planners will have to manage different types of clients, each with a unique set of challenges.
Financial planners will focus on different techniques to counter each type of client. For instance, you might need basic but modern strategies for Gen X, who may not be as updated with technology as Gen Z or Millenials. Similarly, Millennials might require more corporate and business-related ventures, while Gen Z is known for finding an easy way out.
Remote Work and Digital Engagement
Since after the pandemic, remote work has become quite the norm. However, it is believed in the corporate world that finance-related businesses have the potential to become remote ultimately. Most professionals now adopt digital technologies, using cloud computation and online software to compute and process data. As long an employee has the right laptop, they can connect with pretty much anyone.
Besides this, virtual collaboration is expected to hit a stride. Financial planning experts will use tools like video conferencing, project management, and online internal communication that eliminate the need to come to work entirely. Client-oriented departments such as banks are also expected to become remote. You already have a digital application to manage money, but your bank will soon launch a virtual bot to eliminate the need to travel for matters related to banks.
Conclusion
The financial world is diverse and spread into different businesses and industries. With technological evolution, businesses that manage finance matters are slowly adopting new trends to provide modern services and work culture.
The future of financial planning revolves around virtual technology and managing a diverse range of clients. You are now dealing with diverse demographics, each with a different engagement than the other.
